Trump and Carrier Air Conditioners

UPDATE -- DEC 1ST: #Trump LIVE streamed at #Carrier plant in #Indianapolis https://www.youtube.com/watch?v=h5fbu7BjpUc

The air conditioner company Carrier has been in discussions with the incoming Trump administration (including Vice President-elect Mike Pence) about a plan to move about 2,000 jobs from Indiana to Mexico. Carrier is a unit of United Technologies, a leading defense contractor. [Big companies have been swallowing up smaller companies in a record number of mergers and acquisitions, rather than giving their employees raises. Stock prices on the Dow Jones are up 160% and currently at record highs since the March 2009 lows, but wages aren't up 160%]

Carrier drew national headlines in February when when a cellphone video went viral of the bosses' announcement to workers that the company would move (what was then) 1,400 jobs from Indianapolis to Mexico. Candidate Donald Trump seized on the issue, threatening that, if elected, he'd slap a steep tariff on any air conditioners imported back to the U.S.

On Thursday President-elect Trump tweeted that he was "working hard, even on Thanksgiving to get Carrier A.C. Company to stay in the U.S." These efforts were "MAKING PROGRESS," Trump wrote, and "will know soon." Carrier tweeted: "Carrier has had discussions with the incoming administration and we look forward to working together. Nothing to announce at this time."

Wall Street Journal: Deal for Carrier to Keep U.S. Plant Open May Hinge on Tax Overhaul
http://www.wsj.com/articles/deal-for-carrier-to-keep-u-s-plant-open-may-hinge-on-tax-overhaul-1480289575

But if the Wall Street Journal's account is correct, Trump is no longer threatening Carrier with a steep tariff; instead, he's considering a tax cut (even though Trump couldn't deliver that without approval from Congress). According to "a person familiar with the discussions," the Journal reports, the discussions have included "the company's wishes for a tax overhaul that Mr. Trump and Republicans have promised to pursue early in his administration." (That's the Journal's paraphrase, not a quote.)

The bone of contention appears to be taxation of overseas profits. "United Technologies, like other globalized U.S. companies ... has large reserves of cash overseas--profits that corporations are waiting to repatriate to the U.S. until Congress cuts the level of tax they would pay," the Journal writes. "The company reported that 85 percent of its total cash, or more than $6 billion, was overseas, as of the end of 2015. One idea backed by House Republicans but not Mr. Trump would be to create a two-tiered tax rate that would help companies that have used foreign profits for factories and other assets they can't easily repatriate."

The Journal doesn't flat-out say so, but its story seems to suggest that the swap under discussion is that if Trump (and, presumably, Congress) make it easier for Carrier to repatriate U.S. dollars, Carrier will keep the 2000 jobs, or some fraction of them, in Indiana. But if that's the bargain, it's hard to see how either side will enforce it. And it sure doesn't have the same populist ring as "We're going to tax you when those air conditioners come - so stay where you are or build in the United States."

Sanders Statement on Carrier and Outsourcing
http://www.sanders.senate.gov/newsroom/press-releases/-sanders-statement-on-carrier-and-outsourcing

Sen. Bernie Sanders (I-Vt.) wants Trump to keep his promise not to let Carrier export those 2,000 jobs. But Bernie's plan (like Trump's original tariff threat) is more stick than carrot. Sanders would prevent companies that outsource jobs from receiving federal contracts; tax companies that outsource jobs; and tax the compensation of executives whose companies send jobs overseas. The Sanders bill would also "require all companies that outsource more than 50 jobs in a given year to pay back all federal tax breaks, grants and loans they have received from the federal government over the last decade." Given the GOP's control of Congress, the likelihood that Sanders' plan will pass is pretty remote - even if he can sell it to Trump.

///////////// UPDATE 111/30/2016 /////////////////\

TRUMP REACHES DEAL WITH CARRIER:

President-elect Donald Trump surprised skeptics Tuesday night by fulfilling a campaign pledge to save "close to 1000" jobs at a Carrier Air Conditioning plant in Indianapolis, according to a company tweet. Trump himself tweeted late Tuesday that he and Pence will travel to Indiana Thursday to announce the deal ("Thanks Carrier").

Carrier, a unit of United Technologies, became a punching bag for candidate Trump in February after a cellphone video went viral of the bosses announcing the impending loss of 1400 jobs (eventually that climbed to 2000). The deal, much of it negotiated by Vice President-elect Mike Pence's staff in Indiana - where he's still governor until Jan. 20 - extends state tax credits to Carrier.

In addition, the New York Times reports, Trump has agreed to "tone down" his threats to slap a 35 percent tariff on air conditioners that Carrier imports from Mexico back to the U.S.

NEW YORK TIMES: Trump to Announce Carrier Plant Will Keep Jobs in U.S.
http://www.nytimes.com/2016/11/29/business/trump-to-announce-carrier-plant-will-keep-jobs-in-us.html?_r=1

"The victory is largely a symbolic one," write POLITICO Pro's Cogan Schneier and Timothy Noah, "given that the U.S. has been losing more than 300,000 manufacturing jobs each year to overseas competition." And it "doesn't present much of a model moving forward for reversing deindustrialization."

University of Michigan economist Justin Wolfers tweeted Tuesday night: "Every savvy CEO will now threaten to ship jobs to Mexico and demand a payment to stay. Great economic policy." Still, Schneier and Noah write, "Trump's credibility as a tribune of the working class should get at least a brief reprieve."

THE BORDER

Wall Street Journal: Small Businesses Lament There Are Too Few Mexicans in U.S., Not Too Many
http://www.wsj.com/articles/small-businesses-lament-there-are-too-few-mexicans-in-u-s-not-too-many-1480005020

Trump campaigned on a promise to seal the border with Mexico and stem the flow of undocumented immigrants who undercut U.S. wages. But small business owners see the opposite problem, according to Miriam Jordan and Santiago Pérez of The Wall Street Journal:

"As hiring accelerates and the labor market tightens thanks to a steady U.S. recovery, employers who need low-skilled workers are increasingly struggling to fill vacancies," they write. "One big reason: Mexican workers, who form the labor backbone of industries like hospitality, construction and agriculture, are in short supply." [These are "small" businesses? Hedge funds are also considered "small" businesses because they have so few employees.]

The Journal cites a roofing company in Dallas that turned down $20 million in contracts during the past two years because it didn't have enough workers. Tacolicious, a Bay Area restaurant chain, faces similar difficulties recruiting staff, and says it must scale back future expansions as a result. Don't tell the president-elect - we don't like to upset him! - but the number of Mexicans who enter the U.S. illegally has dropped significantly in recent years. The "mass migration from Mexico is over," according to Pia Orrenius, senior economist at the Federal Reserve Bank of Dallas.

"Multiple factors are behind the decline," write Jordan and Pérez. "The Mexican families are smaller and their children are better educated; some Mexican states have launched campaigns to discourage youngsters from making the perilous journey north; and smugglers are commanding higher prices to get migrants through territory often controlled by drug gangs and across a far more secure border than ever before."

Diminished border crossing by Mexicans means the boost in wages that Trump promises for U.S. workers is already happening for some of them. "On the ground in the U.S., many employers report the worker shortage is driving up wages, which is good news for low-skilled workers. It is also driving up costs, however, which could hamper investment and fuel inflation."

UPS WORKER FIRED FOR UNION ACTIVITY

An NLRB administrative law judge found the dismissal of a UPS worker was "tainted" by management's desire to halt union activity, according to a decision issued Friday. The judge found UPS violated the NLRA when it fired Robert Atkinson, a shop steward at a Pittsburgh-area facility who acted as a liaison between the Teamsters Local 538 and managers. Atkinson had campaigned against a collective bargaining agreement between UPS and the Teamsters; the judge found he was fired for refusing to support the deal. But the judge also ruled that due to Atkinson's misconduct - he suggested on social media that a manager had erectile dysfunction, among other comments - Atkinson be awarded only partial back pay and not be reinstated.

CALIF. UNION TO STRIKE DEC. 5

California's largest state-employee union plans to strike Dec. 5, the Sacramento Bee reported last week. The 95,000-member SEIU [who endorsed Clinton over Sanders] Local 1000 represents teachers, accountants, librarians, custodians, laundry workers, and nurses, among other occupations. The local says it's unable, after seven months, to resolve its differences with state officials over a new contract. "The union has denounced the administration's proposed wage increase of 12 percent over four years as inadequate because it fails to address what it contends are gender pay inequities in the state workforce," the Bee reports. "It also objects to the administration's proposal that employees pay more for their health benefits." The strike is set to last just one day, but the Bee's Alexei Koseff points out that state employees don't typically follow through on such threats. "While the possible work stoppage would be unprecedented," he writes, "it might also be illegal: Local 1000 has a no-strike clause in its contract." More here. http://www.sacbee.com/news/politics-government/capitol-alert/article117028358.html [Too bad Social Security recipients didn't get a raise of 12% over 4 years.]